Keith Newman

The best question I ask every single person on 20VC is: “What do you know now that you wish you had known 12 months ago?” My answer: the demand for inference is infinite. It is truly so much larger than any of us comprehend. It will be very hard for neo-cloud providers to move into this market effectively. We will have 3-4 specialised inference providers worth $300-$500BN in this market. @modal is one of them. $1BN in ARR. $300M in sandbox revenue alone. WTF. Erik @bernhardsson is also one of the coolest, most authentic people I have had the fortune of having on the show. Money on cos he is European! 😉 We sat down to shoot the s*** and my notes below. 1. Why I Hate the Description of Entrepreneurship as Pain and Eating Glass. That Is BS Erik rejects the idea that building a company means suffering pain for a big reward at the end. He enjoys work every day, even the hard conversations, and hopes to work on Modal for 20 to 50 years. He has no wish to sell, saying he "would just go and start Modal 2." 2. Why the Days of 90% Software Margins Are Totally Gone Almost no company today has the 90%-plus software margins common in Silicon Valley a decade ago. A dollar paid at the top of the stack flows through applications, models, infrastructure, cloud and NVIDIA, with each layer taking 20% to 30% gross margins. Erik sees Modal reaching 40% to 60% margins long term, but never software margins. Are the days of 90% margins over or is this just the buildout phase of the new cycle meaning margin reduction @venkyganesan @AnjneyMidha 3. Why Inference Alone Will Become Commoditized, and You Have to Have a Suite of Products Around It Selling inference alone is a commodity business with no switching costs and a race to the bottom. Erik argues it must come with post-training, sandboxes, agentic tooling, reinforcement learning, and low-latency and batch inference. Modal has spent five years building that infrastructure, which he calls very hard to copy. Do you agree, inference will be commoditised and product breadth is the secret to retention @evishria @sarahcat21 4. Why We Will Have More Not Fewer Engineers in the Future Every time programmers become more efficient, demand for software rises. Erik says the job was never translating English into code but understanding human requirements, and that work keeps moving up the stack, from assembly and punch cards to Python and now agents. He expects software engineers to be fine for the next 10 to 20 years. What does no one see that everyone should see about the future of software engineering @matansf @pmarca @rabois 5. The Wildest Prediction on the Future of the Inference Market The inference market has grown 10x to 100x bigger than Erik expected, and he predicts it will split into many specialized segments. He sees room for low-latency, high-latency, fine-tuning and post-training offerings, plus new hardware and technologies that need far fewer resources. What is your wildest prediction on the future of the inference market @gavinsbaker @eladgil @romanchernin 6. The $15.75 Billion Company That Has Never Made a Pitch Deck Modal has never made a pitch deck for any of its rounds. Erik gets to know investors well before raising and had spoken with Rich and Gonzalo at Accel for at least a year before the D round, so the deal came together very quickly. (links in comments)